In an attempt to lure tourists to Aqaba, $9 billion in investments have been pumped into the port city, and plans are ahead to top that amount up by an additional $5 billion over the next five years. The question is will Aqaba's King Hussein International Airport be able to handle the traffic? Dana Baradei reports.
To reduce government interference in the commercial decisions of air carriers, a special committee comprised of the Aqaba Special Economic Zone Authority (ASEZA) and Royal Jordanian Airlines (RJA), in cooperation with the Ministry of Transport, successfully implemented an open skies agreement for Aqaba in 2003. The agreement essentially means that commercial airlines that previously were not permitted to fly over and land in the port city can now do so. That same year, the newly named King Hussein International Airport (KHIA) was declared open by the Civil Aviation Authority (CAA).
Although surrounded by major airports in Egypt, Saudi Arabia, and Israel, KHIA has some competitive advantages: it is the only airport that has adopted the open skies policy. Additionally, the airport offers lower rates due to less expensive air navigation charges. The CAA, which normally determines the air navigation charges for each airport in the Kingdom, lowered these charges in an attempt to attract more business to KHIA.
KHIA might only have one runway, a definite disadvantage, but it also houses an air cargo terminal with a 5,000-square meter warehouse and enough space to accommodate eight wide body aircrafts. It also features a cold storage area and 1,000 square meters of office space.
Still, the airport does have its fair share of technical difficulties. Until now, there is no state of the art integrated IT system and no definite airport marketing strategy, according to Aqaba Development Corporation (ADC), a private sector corporation that acts as the central development body for the Aqaba Special Economic Zone (ASEZ).
Another disadvantage is that since ASEZ is an independent authority, businesses have to undergo a "double check" at customs when transporting their goods to the rest of the country; one customs check by ASEZ and one by the central government. A tedious process, say traders, which ADC is working to rectify by following international guidelines. ADC and RJA have also introduced two daily flights between Aqaba and Amman to encourage investments and tourism starting this month.
With a 17.3% rise in international freight traffic in the Middle East and with the region recording the world's fastest growth in passenger traffic with an increase of 18.3% in 2006, according to International Air Transport Association (IATA), KHIA still needs to do more to attract an increased amount of business. ADC is hoping to reel in business by establishing direct routes to and from the airport.
The total number of passengers to and from KHIA for the year 2006 was 186,465. To handle the extra traffic, expansion plans are underway and will move in tandem with the development plans of the city and aim to meet the demands of this rapidly growing port town.
Recognizing the need for marketing the airport, ADC, which owns the country's ports, Aqaba's only international airport, and strategic tracts of land, has also attracted regional partners, including a 15-year partnership with the National Aviation Services (NAS) of Kuwait. NAS (who will invest JD2.7 million) will manage, operate, and service all cargo planes using KHIA. "This strategic partnership will help in the realization of one of the ultimate goals of ADC, which is to maximize the potential of Aqaba as a leading Red Sea business hub," explained Imad Fakhoury, chairman and CEO of ADC. ADC has also agreed with Baddad Aviation (a company established by Baddad group to undertake the servicing of Russian aircrafts as per an agreement signed with Domodadovo airport) to rent and invest in 30,000 square meters of the airport's land with the aim of building hangars for aircraft maintenance with a preliminary value of JD30 million.
A similar agreement, an estimated JD3 million investment, has been made with Jordan Aviation to set up an aircraft maintenance center for servicing their own aircrafts. ADC's initiative to attract private flight academies to base their operations in KHIA, such as the Ayla Flight Academy, the Royal Jordanian Air Academy and the Mid East Aviation Academy, with plans for the latter still in the negotiation phase, is part of how ADC plans to develop the airport. This will help establish Aqaba as a hub for flight academies, encourage prospective students to attend, boosting educational tourism in the area.
ADC has no intention of selling KHIA to a private company. Nonetheless, it expects to launch Aqaba Airports Company (AAC) in February of this year. AAC, a company owned by ADC, will be in charge of the operations and management of the airport.
"The Civil Aviation Authority used to be both the operator and regulator of the airport; however, AAC, a subsidiary of ADC, is in the process of receiving a license to manage the airport and will take over all airport operations," explained Captain Hanna Najjar, director of AAC. The AAC, although not keen on privatization, does have plans to attract a regional investor who will upgrade the facilities and service and implement the airport's expansion plans in the near future. KHIA's plans to expand seem to be tied to further progress on multibillion dollar development projects of Aqaba. And for now, things appear to be moving in the right direction relatively turbulence free.
© Jordan Business 2007
